FIRST DIVISION
SPOUSES HOWARD T. CO CHIEN G.R. No. 162090
and SUSAN Y. CO CHIEN,
Petitioners,
Present:
PUNO,
CJ., Chairperson,
- versus
- SANDOVAL-GUTIERREZ,
AZCUNA,
and
GARCIA,
JJ.
STA. LUCIA REALTY &
DEVELOPMENT, INC., and ALSONS Promulgated:
LAND CORPORATION,
Respondents.
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D E C I S I O
N
PUNO, CJ.:
This
case is a Petition for Certiorari under Rule 45 of the Revised Rules of Court appealing
the decision of the Court of Appeals in CA G.R. SP No. 78161 entitled “Spouses Howard T. Co Chien
& Susan Y. Co Chien v. Sta. Lucia Realty & Development, Inc. and Alsons
Land Corporation.”
The facts are undisputed.
Sometime in December 1995, private
respondents Sta. Lucia Realty & Development, Inc. (Sta. Lucia) and Alsons
Land Corporation (Alsons) offered for sale to the general public parcels of land
and golf shares to the Eagle Ridge Golf and Residential Estates (Eagle Ridge)
in General Trias,
On P1,293,300.00),
with one half of the purchase price as down payment to be paid upon signing the
contract and the balance upon delivery of the title to the land to Spouses Co
Chien. The petitioners were also given a
10% discount on the purchase price and thereafter they paid a down payment of
five hundred eighty one thousand five hundred thirty five pesos (P581,535.00),
after the discount. It was also agreed
in the addendum to the Contract to Sell that the 10% discount deducted from the
down payment shall be forfeited and added to the balance, should Spouses Co
Chien fail to pay the said balance within seven (7) days from notice that the
title to the subject property is ready for delivery.[3]
At the time the Contract to Sell was
executed, the private respondents did not possess a License to Sell and a Certificate
of Registration from the Housing and Land Use Regulatory Board (HLURB) as
required under Sections 4 and 5 of Presidential Decree No. 957 (P.D. 957). The License and Certificate were issued only
in July 1997, one year and six months after the execution of the Contract to
Sell between the petitioners and the private respondents.[4]
On
On June 16, 1999, Spouses Co Chien
sent a written demand to Sta. Lucia for the refund of their down payment on the
ground that the Contract to Sell was void for the reason that at the time of
its execution, December 20, 1995, the private respondents had no Certificate of
Registration and License to Sell as required by Sections 4 and 5 of P.D. 957.[6] On
On P10,000.00
as attorney’s fees. The HLURB Arbiter
ruled that the lack of Certificate of Registration and License to Sell at the
time of execution of the Contract to Sell resulted in the nullification of the
contract.[8]
On appeal, the HLURB Board of
Commissioners (the HLURB Board) reversed the HLURB Arbiter’s decision and held
that the Contract to Sell was valid and ordered Spouses Co Chien to pay the
private respondents the balance of P646,150.00 without penalty
interest. The HLURB Board also ordered
Sta. Lucia and Alsons to pay jointly and severally an administrative fine of P20,000.00
for two counts of violation of Section 4 of P.D. 957 and another P20,000.00
for two counts of violation of Section 5 of the same decree.[9]
Spouses Co Chien then appealed to the
Office of the President. In a decision
dated
On
Hence, this petition.
The
primary issues in this case are as follows:
(1) whether the absence of the Certificate of Registration and License
to Sell at the time of execution rendered the Contract to Sell and its addendum
null and void; and (2) whether the petitioners are guilty of laches or
estoppel.
We
will discuss the issues seriatim.
It
is the contention of the petitioners that the lack of Certificate of
Registration (the Certificate) and License to Sell (the License) on the part of
the private respondents at the time the contract was executed rendered the
Contract to Sell null and void, thus, entitling them to a refund of their down
payment. Spouses Co Chien aver that the
use of the words “shall not” and the phrase “unless he shall have first
obtained a license to sell within two weeks from the registration of such
project” in Section 5 of P.D. 957 indicate that the absence of the Certificate
and License render the contract null and void.[12]
The private respondents, on the
other hand, state that the provision of law invoked by Spouses Co Chien does
not provide that the absence of the Certificate and License at the time the
contract was executed would automatically invalidate the contract.[13] The private respondents assert that the Sec.
5, P.D. 957 is merely directory as it does not affect substantial rights, does
not relate to the essence of a sale and compliance therewith is simply a matter
of administrative convenience.[14]
Sections 4 and 5 of P.D. 957 state:
Sec. 4. Registration of Projects
.
. . .
The owner or the real estate dealer
interested in the sale of lots or units, respectively, in such subdivision
project or condominium project shall register the project with the Authority
by filing therewith a sworn registration statement containing the following
information:
.
. . .
The subdivision project of the
condominium project shall be deemed registered upon completion of the above
publication requirement. The fact of such registration shall be evidenced by a
registration certificate to be issued to the applicant-owner or dealer.
Sec.
5. License to Sell. - Such
owner or dealer to whom has been issued a registration certificate shall not,
however, be authorized to sell any subdivision lot or condominium unit in
the registered project unless he shall have first obtained a license to sell
the project within two weeks from the registration of such project.
The
Authority, upon proper application therefor, shall issue to such
owner or dealer of a registered project a license to sell the project if,
after an examination of the registration statement filed by said owner or
dealer and all the pertinent documents attached thereto, he is convinced
that the owner or dealer is of good repute, that his business is financially
stable, and that the proposed sale of the subdivision lots or condominium
units to the public would not be fraudulent.[15]
The same decree further states:
Sec.
38. Administrative Fines. - The
Authority may prescribe and impose fines not exceeding ten thousand pesos for
violations of the provisions of this Decree or of any rule or regulation
thereunder. Fines shall be payable to the Authority and enforceable through
writs of execution in accordance with the provisions of the Rules of Court.
Sec.
39. Penalties. - Any person who
shall violate any of the provisions of this Decree and/or any rule or
regulation that may be issued pursuant to this Decree shall, upon conviction,
be punished by a fine of not more than twenty thousand (P20,000.00) pesos
and/or imprisonment of not more than ten years: Provided, That in the case of
corporations, partnership, cooperatives, or associations, the President,
Manager or Administrator or the person who has charge of the administration of
the business shall be criminally responsible for any violation of this Decree
and/or the rules and regulations promulgated pursuant thereto.[16]
P.D.
957 is a law that seeks to regulate the sale of subdivision lots and
condominiums in view of the increasing number of incidents wherein “real estate
subdivision owners, developers, operators, and/or sellers have reneged on their
representations and obligations to provide and maintain properly”[17]
the basic requirements and amenities, as well as “reports of alarming
magnitude…of swindling and fraudulent manipulations perpetrated by unscrupulous
subdivision and condominium sellers and operators.”[18] As such, P.D. 957 requires the registration not
just of the developers, sellers, brokers and/or owners of the project but also
of the project itself.[19] Upon registration of the project, a license
to sell must be obtained prior to the sale of the subdivision lots or
condominium units therein.[20] The law also provides for the suspension and
revocation of the registration and license in certain instances, as well as the
procedure to be observed in the event thereof.[21] Finally, the law provides for administrative fines
and other penalties in case of violation of, or non-compliance with its
provisions.[22]
A review of the relevant provisions of P.D.
957 reveals that while the law penalizes the selling of subdivision lots and
condominium units without prior issuance of a Certificate of Registration and License
to Sell by the HLURB, it does not provide that the absence thereof will
automatically render a contract, otherwise validly entered, void. The penalty imposed by the decree is the
general penalty provided for the violation of any of its provisions.[23] It is well-settled in this jurisdiction that
the clear language of the law shall prevail.[24] This principle particularly enjoins strict
compliance with provisions of law which are penal in nature, or when a penalty
is provided for the violation thereof.
With regard to P.D. 957, nothing therein provides for the nullification
of a contract to sell in the event that the seller, at the time the contract
was entered into, did not possess a certificate of registration and license to
sell.[25] Absent any specific sanction pertaining to
the violation of the questioned provisions (Secs. 4 and 5), the general
penalties provided in the law shall be applied.
The general penalties for the violation of any provisions in P.D. 957
are provided for in Sections 38 and 39.
As can clearly be seen in the aforequoted provisions, the same do not
include the nullification of contracts that are otherwise validly entered.
As found by the Court of Appeals, in the case
at bar, the requirements of Sections 4 and 5 of P.D. 957 do not go into the
validity of the contract, such that the absence thereof would automatically
render the contract null and void. It is
rather more of an administrative convenience in order to allow for a more
effective regulation of the industry.[26]
While it is the intent of the prohibition
in Section 5 of P.D. 957 “to prevent cases of swindling and fraudulent
manipulations perpetrated by unscrupulous subdivision and condominium sellers
and operators”[27]
and to ensure that “penalties be imposed on fraudulent practices and
manipulations committed in connection therewith,”[28] such does not obtain in this case, as it is
undisputed that the title to the subject property has been available for more
than a year, and the Eagle Ridge project was almost 100% completed, before
Spouses Co Chien decided to have the Contract declared void and to seek a
refund of their down payment. Contrary
to Spouses Co Chien’s bare allegations of bad faith on the part of the private
respondents, the Court of Appeals found that at the time the Contract to Sell
was executed, the applications for the Certificate and the License were already
pending with the HLURB but were only issued several months thereafter.[29] More importantly, when Spouses Co Chien
received notice of the availability of the title to the subject property, the
private respondents had long since been issued the Certificate and License. It was in fact Spouses Co Chien who, instead
of paying the balance as required in the contract, sought to renegotiate the
same, and failing therein, sought to nullify the contract a year and a half
after notice that the title to the subject property, free from any liens and encumbrance,
was already available for delivery.
One
of the purposes of P.D. 957 is to discourage and prevent unscrupulous owners,
developers, agents and sellers from reneging on their obligations and
representations to the detriment of innocent purchasers. The law mandates HLURB to closely regulate,
supervise and monitor the real estate industry, particularly residential
developments such as subdivisions and condominium projects. To this end, P.D. 957 provides for the issuance,
suspension, revocation and even the outright denial of registration and license
to developers, agents and the project itself, as well as penalties for the
non-compliance with the requirements provided therein. It does not, however, provide for the
nullification of a contract, due to the lack of registration and license at the
moment of execution, which in this case was thereafter undisputedly issued by
HLURB. As correctly averred by
respondent Alsons, the requirement for registration and license is primarily
directed at preventing fraudulent schemes from being perpetrated on the public
who seek to have their own abode.[30] No fraud has been alleged, much less proven, by
Spouses Co Chien in the present case. The
lack of certificate and registration, without more, while penalized under the
law, is not in and of itself sufficient to render a contract void. Such a deficiency, however, together with
other relevant factors may be duly considered in nullifying a contract, should
the circumstances so demand.
The
second issue in the instant petition is whether or not estoppel bars the claim
of Spouses Co Chien. There are generally
three kinds of estoppel: (1) estoppel in
pais; (2) estoppel by deed; and (3) estoppel by laches. In the first classification, a person is considered
in estoppel if by his conduct, representations or admissions or silence when he
ought to speak out, whether intentionally or through culpable negligence, “causes
another to believe certain facts to exist and such other rightfully relies and
acts on such belief, as a consequence of which he would be prejudiced if the
former is permitted to deny the existence of such facts.”[31] Estoppel by deed, on the other hand, occurs
when a party to a deed and his privies are precluded from denying any material
fact stated in the said deed as against the other party and his privies.[32] Estoppel by laches is considered an equitable
estoppel wherein a person who failed or neglected to assert a right for an
unreasonable and unexplained length of time is presumed to have abandoned or
otherwise declined to assert such right and cannot later on seek to enforce the
same, to the prejudice of the other party, who has no notice or knowledge that
the former would assert such rights and whose condition has so changed that the
latter cannot, without injury or prejudice, be restored to his former state.[33]
In
the present case, Spouses Co Chien only demanded a refund and alleged the
nullity of the Contract due to lack of the Certificate and License after it
failed to renegotiate for a better lot or a bigger discount, or three and a
half (3-1/2) years after the execution of the contract, and one and a half
(1-1/2) years from notice of the availability of the title and the demand for
full payment. Due to the unexplained
delay in the assertion of their rights despite the opportunity to do so,
Spouses Co Chien are now estopped from raising the issue of lack of the Certificate
and License, particularly since the same have long since been issued to the
private respondents. In fact, there is
nothing left for the fulfillment of the obligations set forth in the Contract
to Sell and its addendum, except for the payment of the balance by Spouses Co
Chien so that the title to the property can finally be transferred in their
name. Further, the act of renegotiating
the Contract to Sell may be considered a tacit ratification of whatever defect
the contract allegedly suffers from.
It
is well-settled that the terms of a contract have the force of law between the
parties.[34] As such, the terms thereof shall govern their
relationship, rights and obligations in connection with the same. Obligations arising from contracts should be
complied with in good faith. Unless the
stipulations in the contract are contrary to law, morals, good customs, public
order or public policy, the same are binding as between the parties.[35] In the instant case, as previously discussed,
the Contract to Sell between Spouses Co Chien and private respondents Sta.
Lucia and Alsons has all the essential requisites of a valid and binding
contract. While there is non-compliance with
the requirements in Sections 4 and 5 of P.D. 957 due to the lack of the
Certificate and License at the moment of execution, such defect does not affect
the intrinsic validity of the contract, particularly in this case wherein the
said Certificate and License have been issued prior to the demand for the
payment of the balance of the purchase price and the project is almost 100%
complete and operational.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of
Appeals in CA-G.R. SP No. 78161 is AFFIRMED in toto.
Costs
against petitioners.
SO
ORDERED.
REYNATO S. PUNO
Chief Justice
WE
CONCUR:
Associate Justice
RENATO C. CORONA ADOLFO S. AZCUNA
Associate
Justice
Associate Justice
CANCIO C. GARCIA
Associate Justice
Pursuant
to Section 13, Article VIII of the Constitution, I certify that the conclusions
in the above decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo, p. 9.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12] Rollo, p. 224.
[13]
[14]
[15] Presidential Decree No. 957,
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24] Government Service Insurance
System v. Commission on Audit, G.R. Nos. 138381 and G.R. No. 141625,
[25] Presidential Decree No. 957, Sec. 5.
[26] Rollo, pp. 43-44.
[27]
[28]
[29]
[30] Rollo, p. 255.
[31] 31 Corpus Juris Secundum 237.
[32] 31 Corpus Juris Secundum 155.
[33] Placewell International Services
Corporation v. Ireneo B. Camote, G.R. No. 169973, June 26, 2006; Heirs
of Eulalio Ragua v. Court of Appeals, G.R. Nos. 88521-22 and 89366-67,
January 31, 2000.
[34] Spouses Ponciano Almeda and
Eufemia P. Almeda v. The Court of Appeals and Philippine National Bank,
G.R. No. 113412,
[35] Romeo
G. Roxas, et al. v. Antonio de Zuzuarregui, et al., G.R. Nos. 152072 and
152104, January 31, 2006.